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July 18:
Source: http://www.nytimes.com/2015/07/18/business/energy-environment/coal-miners-struggle-to-survive-in-an-industry-battered-by-layoffs-and-bankruptcy.html?_r=0
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July 18:
WAYNE, W.Va. — There is pain across the nation’s coal fields, but here in West Virginia, the disruption is particularly acute.
Mines
are closing almost every month. Sawmills that provide wooden support
beams for the tunnels are laying off workers, and diners are putting up
signs asking their customers to pray for the miners.
The coal industry, long the heart that pumped the economy here, is in deep trouble, buffeted by power plants switching to cheap natural gas,
crippling debt, mounting foreign competition and increasingly strict
regulations to limit greenhouse gases and toxic emissions like mercury.
“It’s
just the times we are facing,” said Mitchell Maynard, a miner, as he
left the Camp Creek mine recently after one of his last shifts before he
and more than 400 of his co-workers lose their jobs.
Mr.
Maynard, who wears a large tattoo on his upper left arm showing a
joyous Jesus embracing a blissful miner, has been contemplating what he
will do to support his family since he learned last month that the mine
will close for good. He has yet to come up with an answer, but he has
not lost hope. “I know I will find guidance from the Lord,” he said.
Mr. Maynard’s once-mighty employer, Alpha Natural Resources,
and the entire coal industry could use some divine intervention right
about now. The most immediate challenge to the coal industry is the
hydraulic fracturing revolution that has produced a glut of natural gas over the last four years, making the fuel cheaper to burn and stimulating a relentless switch by utilities away from coal.
Since
January, six domestic coal producers have filed for bankruptcy,
including Patriot Coal, which applied for Chapter 11 for the second
time.
The
decline has taken a heavy toll here in Wayne County and the surrounding
area in West Virginia and Kentucky, where roughly one in three of the
nation’s 80,000 coal miners work.
They
are at the center of a layoff epidemic that has reduced their numbers
by roughly 5,000 annually over the last four years in the two states
alone. And the wave of layoffs is spreading, with Murray Energy, one of
the nation’s largest coal producers, recently announcing it would cut
its work force in Ohio and Illinois, as well as West Virginia, by more
than 1,800 miners.
“In
the past we always knew that the demand for coal would rebound and the
jobs would come back,” Cecil E. Roberts Jr., the United Mine Workers of
America president, said in a speech in June. “This time, there is no
such certainty. Fundamental changes are underway in America and across
the world that will have a lasting impact on the coal industry and our
jobs.”
Coal
production in the United States has declined by 15 percent since 2008,
and still, stockpiles of coal are mounting at mines as coal-fired power
plants shut down month after month.
A
commodity that once fired half of the country’s power now accounts for
just under 40 percent. And the Energy Department projects that
percentage will slide further, to 34 percent in 2040, as power plants
turn to natural gas and renewables like wind and solar power.
The
result is compounded economic misery in Wayne County, with its potholed
roads, vacant stores, abandoned trailer homes and gutted gas stations
with little more standing than antique Phillips 66 signs.
Local
officials say the new mine closing will mean millions of dollars in
lost taxes to local governments, schools and hospitals. Already, one
village is in receivership. Railroad workers who used to carry coal from
the local mines are commuting farther and farther for work, and fear
they will eventually have to move or lose their jobs.
“There
is widespread bitterness about the country taking our coal for all
these years when it needed us,” said Don Perdue, executive director of
the Wayne County Economic Development Authority, “and then simply saying
goodbye.”
The
industry as it is currently composed is no longer sustainable,
according to Wall Street analysts. They note that exports, long viewed
as coal’s savior, are dropping as China curtails pollution. The stronger
dollar is making American coal more expensive on international markets
relative to competitors like Australia, Indonesia and Colombia. And
prices for metallurgical coal, a traditional moneymaker for coal
companies, especially here in Appalachia, have plunged by more than half
over the last three years.
The
depressing panorama has sent shares of Peabody Energy, the American
coal company that is the largest in the world, from $72 just four years
ago to under $2 a share. On Thursday, the New York Stock Exchange
suspended trading in Alpha’s stock and moved to remove it from the
exchange.
“They
are all just trying to survive and hold on,” said Nathan Littlewood, a
Credit Suisse mining research analyst, “and hope they are the last man
standing.”
No company is hanging on tighter and is facing stiffer odds than Alpha Natural Resources,
a top producer of various grades of coal used to make steel and produce
power. It has more than 50 active mines and 20 coal preparation plants
across Virginia, West Virginia, Kentucky, Pennsylvania and Wyoming. For
the last three years it has been forced to relentlessly close mines,
shaving its payroll by roughly 4,000 workers, or more than a quarter of
its work force.
Like
many coal companies, Alpha went on a buying spree between 2009 and 2011
when coal prices were high, global demand was galloping along with the
surging Chinese economy and their earnings were peaking. Perhaps its
most fateful decision was to buy Massey Energy, a major Appalachian
producer that tilted toward producing coal for steel making, for $7 billion in 2011.
The
acquisition was based on an assumption that China and other developing
countries had an insatiable appetite for Appalachia’s
high-heat-producing coal for steel making, and few analysts predicted
the deceleration of Chinese steel demand.
After
suffering through more than three years of losses, Alpha is burning
through cash and is struggling to service its $3.3 billion debt burden.
For
workers, that means more closed mines. Last week, Alpha warned nearly
300 workers in southeastern Kentucky and Virginia that it expected to
close six mines and a processing plant.
“We’ve
been navigating through a long down cycle,” Alpha’s chief executive,
Kevin S. Crutchfield, said in a recent conference call. “In fact, it’s
become quite apparent that market conditions have deteriorated further
since the beginning of the year. Frankly, these factors are outside of
our control.”
But
many if not most other large coal companies are not in much better
shape, energy analysts say, and the industry must endure a painful
reorganization, much like those that the steel and auto industries went
through in recent decades.
“It’s
actually pretty simple,” said Brandon Blossman, managing director for
research at Tudor, Pickering, Holt & Company, the energy investment
and banking firm. “These guys go through bankruptcy, they clean up their
balance sheets and they continue to produce coal.”
But miners being laid off here are left with few options.
After
several decades working as a miner, Patrick Lawson has paid off the
mortgage on his trailer home, and he is proud of his antique glassware
collection and a modest nest egg he thought he could live on after
working a few more years. But he has several badly damaged fingers, has
lost much of his hearing and now is facing shoulder surgery from mine
work, and said that his career options after his job ends at the Camp
Creek mine in a few weeks were pretty limited.
“I
may be working somewhere for minimum wage before it’s over,” Mr. Lawson
said with a shrug while enjoying a cool breeze on his front porch. “I
don’t think the coal industry will ever be back to what it was.”Source: http://www.nytimes.com/2015/07/18/business/energy-environment/coal-miners-struggle-to-survive-in-an-industry-battered-by-layoffs-and-bankruptcy.html?_r=0
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